Gold trades in tight range ahead of US Fed meeting

BENGALURU: Gold prices were steady on Tuesday within a tight range as investors adopted a wait-and-watch approach ahead of a two-day monetary policy meeting of the US Federal Reserve.
Spot gold was up about 0.1 percent at $1,222.15 an ounce at 0705 GMT while US gold futures were 0.1 percent lower at $1,220.70 an ounce.
The dollar strengthened versus the yen after Bank of Japan made small tweaks to policy against market expectation of drastic changes, limiting the upside potential for the yellow metal.
At the meeting that ended on Tuesday, the BOJ took measures to make its massive stimulus programme more flexible and pledged to keep interest rates “very low” for the time being.
Later in the day, the US Federal Reserve begins a two-day monetary policy meeting. The central bank is widely expected to stand pat on monetary policy, but investors will be paying close attention to the central bank’s tone for cues on the pace of further interest rate hikes.
“There’s no clear direction for investors to really play on, and I suppose until there’s a bit more clarity from the US Federal Reserve in particular, I think that’s going to remain the case,” ANZ analyst Daniel Hynes said.
“We could see some support return post the meeting … I’ll be looking for a rebound post the meeting, particularly as they’re not as hawkish as they have been,” Hynes said.
The US central bank has raised benchmark lending rates twice this year and signalled two more increases by year end.
Higher US rates tend to boost the dollar, making greenback-denominated gold more expensive for holders of other currencies.
“We do not expect any deviation in the Fed’s plan … the precious metal remains heavily skewed towards the downside with upside being largely limited by dollar influences,” Benjamin Lu, a commodities analyst at Singapore-based broker Phillip Futures, said in a note.
Meanwhile, the Bank of England is seen raising rates when it concludes a meeting on Thursday.
Spot gold is biased to fall into a range of $1,206-$1,214 per ounce, according to Reuters technicals analyst Wang Tao.
Among other precious metals, silver was unchanged at $15.48 an ounce, platinum rose 0.5 percent to $828.10 and palladium was 0.2 percent lower at $927.50.